I had a small tax-form question that turned into a better recordkeeping question: who is responsible for Form 8606? Is it something an IRA custodian issues, like a 1099-R or 5498, or is it something the taxpayer has to file to keep the IRS from losing track of after-tax IRA money?
This is private exploration and general reflection, not tax, legal, financial, or investment advice.
The short answer is that Form 8606 is not really "issued" by the custodian. The taxpayer files it with the tax return when the facts require it. The custodian may send supporting forms, but those forms are not a substitute for the taxpayer's basis ledger.
That distinction matters because the mistake is easy to make. If a bank or brokerage sends a Form 5498 after an IRA contribution, and a Form 1099-R after a distribution or conversion, it is tempting to assume the custodian has also told the IRS the whole tax story. It has not. The custodian is reporting account activity. Form 8606 is where the taxpayer explains how much of the relevant IRA money is after-tax basis, how much is taxable, and what basis carries forward.
The IRS says Form 8606 is used for nondeductible traditional IRA contributions, distributions from traditional, SEP, or SIMPLE IRAs when nondeductible contributions have ever been made, conversions from those IRAs to Roth IRAs, and distributions from Roth IRAs. That is a broader job than "I made a backdoor Roth contribution this year."
My current mental model is this:
| Document | Who normally creates it | What it helps prove |
|---|---|---|
| Form 8606 | Taxpayer, usually with the income tax return | Nondeductible IRA basis, taxable versus nontaxable portions of certain IRA distributions, and Roth conversion basis mechanics. |
| Form 5498 | IRA trustee or custodian | IRA contribution and account information that can support what happened in the account. |
| Form 1099-R | Plan or IRA payer | Distributions, including IRA distributions and conversions that need to be reconciled on the return. |
| Brokerage, bank, and trade confirmations | Financial institution or taxpayer records | The practical transaction trail when the tax forms are too summarized to answer every audit question. |
The form that feels like the official answer is actually Form 8606, because it carries the basis calculation. The other documents are evidence for the calculation.
For a simple nondeductible IRA or Roth conversion year, I would want the following records in front of me before trusting the software output:
That last item is the one I would not skip. In the 2025 Form 8606 instructions, the line 6 calculation asks for the total value of all traditional IRAs as of December 31, plus certain outstanding rollovers. The instructions also generally treat traditional SEP and SIMPLE IRAs as traditional IRAs unless they say otherwise. So the form is not only asking what happened in the one account that feels mentally connected to the contribution.
That is why a clean Form 8606 answer is part tax form, part inventory exercise. It needs the contribution, the distribution or conversion, the old basis, and the relevant IRA balances that make the pro-rata math work.
The audit-defense version of this is not "keep a copy of the software screen." I would think of it as a small evidence packet for each year Form 8606 matters.
The reason to keep prior Forms 8606 is not nostalgia. Basis is a running ledger. The IRS instructions even include tables for pulling basis amounts from prior-year Form 8606 lines because the form has changed over time. That is a useful warning: if the only place the basis exists is in memory, the record is fragile.
The dangerous simplification is "my custodian reported the IRA contribution, so I am covered." Form 5498 may help show that money went into an IRA. Form 1099-R may help show that money came out or moved in a conversion. But neither one, by itself, necessarily proves the taxpayer's nondeductible basis or carries that basis into future years.
Form 8606 is doing that job. The IRS instructions say there can be a penalty for not filing it when required for a nondeductible traditional IRA contribution, and a separate penalty for overstating nondeductible contributions, unless reasonable cause applies. I read that less as a threat and more as a signal that the form is the basis record the taxpayer is expected to maintain.
So my practical answer is: do not wait for Form 8606 to arrive from the custodian. It is not that kind of document. Use the custodian forms and statements as inputs, but treat Form 8606 as the taxpayer-filed ledger that preserves the after-tax IRA story.
Sources checked: the IRS page for Form 8606, Nondeductible IRAs, the 2025 Instructions for Form 8606, IRS pages for Form 5498 and Form 1099-R, and IRS Publication 590-B.